Tullow Oil share price rallies as group updates on trading

Shares in Tullow Oil (LON:TLW) have jumped more than eight percent in London in today’s session, after the Africa-focused oil explorer updated investors on its recent performance, reporting that it had agreed a deal with its lenders to extend its borrowing facilities. The update has prompted analysts at Barclays to reiterate its bullish stance on the mid-cap oil group.

As of 13:20 BST, Tullow Oil’s share price had added 8.77 percent to stand at 273.33p, outperforming the mid-cap FTSE 250 index which is 0.72 percent worse off at 16,961.49 points. The group’s shares have lost more than 35 percent of their value over the past year, but are up more than 65 percent in the year-to-date.
Tullow Oil said in a statement today that its first-quarter working interest production had averaged 59,200 barrels of oil per day (bopd) for West Africa and 6,500 barrels of oil equivalent per day (boepd) for Europe. The group’s output was lower than previously expected following damage to production facilities at Tullow’s flagship Jubilee field in Ghana. The FTSE 250 company pointed out that its production guidance will be re-issued once new operating arrangements have stabilised.

The heavily-indebted group, whose performance has been hit by the oil price rout, however, also said that it had extended a revolving corporate facility extended by 12 months to April 2018. Tullow further noted that it had revised down its capital expenditure guidance for the current year by about $100 million to $1 billion with further savings expected.
Barclays welcomed the development, reiterating its ‘overweight’ recommendation on the mid-cap oil producer with a price target of 280p. The analysts were quoted as commenting that the facility would “comprehensively address remaining concerns about the balance sheet” and that it was “sufficient to provide Tullow with at least $500 million of financial headroom through 2017E”.
As of 13:56 BST, Thursday, 28 April, Tullow Oil plc share price is 273.60p.

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